For several years now, American politics has been in upheaval: terrorism, war, scandal, the meltdown of the Bush administration. But the results of Thursday's Iowa caucuses were the clearest sign yet that something transformative is happening - old orders are being cast away, new faces are surging forward. Iowa suggests that American voters are in a mood to place bets and take risks.

This is terrible news for the major party establishments. That was evident on Thursday night, on a chartered jet from Iowa to New Hampshire in the wee hours after the caucuses. On board was the press corps that follows Hillary Clinton, as well as her aides who worked their way down the aisle furiously spinning the night's disastrous results. With strained faces, the likes of longtime Clinton pollster Mark Penn and former Democratic party chairman Terry McAuliffe talked themselves hoarse over the engines, arguing that Hillary could survive a third-place Iowa finish some people consider a political death sentence.

Perhaps. But it's clear that in spurning the mighty Clinton machine for an upstart such as Barack Obama, Iowa Democrats were also rejecting their party's old guard. Likewise, in choosing the little-known Arkansan Mike Huckabee, Iowa Republicans also defied their party's establishment. GOP [Grand Old Party] barons from Washington to Wall Street - the think-tankers, columnists and money men who supported the Bush administration - see the folksy preacher as an unelectable 'rube' [hick] with an intolerable weakness for higher taxes and social spending. But with Huckabee's clear win over Mitt Romney, they, too, were rebuffed just as thoroughly as were the Clintonites. Iowans of both parties have issued a call to reboot their political system.

It's too soon to say whether these insurgents can win their parties' nominations. (Obama's prospects look much better than the underfunded and more widely resisted Huckabee's.) But it seems likely that this taste for upheaval will carry through to the 2008 election. With no incumbent President or Vice-President on the ticket, and with the traumas of 9/11 and Iraq beginning to fade, voters will make a reassessment of their beliefs and preferences. In all probability, that will restore the Democrats to the White House after eight years of exile.

Why? Because America is becoming a fundamentally Democratic country. That may surprise observers startled by the long reign of the Bush administration. But the notion that the Bush era showed the US to be a 'conservative' nation is wrong. And the 2008 election will prove it.

Among those who buy into the fallacy that the American instinct is truly conservative, former White House svengali Karl Rove is the best known. When George W Bush was elected in 2000, Rove boasted that the country was embarking upon a political 'realignment' that would usher in a generation of Republican rule. His ambition seemed comically grandiose. Until 9/11. The World Trade Centre and Pentagon attacks threw the American psyche into a reactionary jolt, one that Rove and his President happily exploited.

On 10 September 2001, Bush had been a faltering President struggling against Democrats in the Congress. Two years later, Republicans had exploited national security fears to consolidate their power on Capitol Hill and launch an invasion of Iraq. Polling even showed that public opinion slanted rightward on issues such as abortion and gay marriage, as people sought comfort in 'traditional values'.

To Rove and his cohorts, 9/11 simply accelerated an inexorable shift within the American electorate towards Republican values such as lower taxes, hawkish foreign policy and social conservatism. Thus, when a Democratic surge cost Republicans control of the Congress in November 2006, conservatives dismissed it. The American psyche hasn't shifted, they said; rather, the Republican brand has suffered a horrible run of luck - from Bush's mismanagement of Iraq to hurricane Katrina to sex scandals involving Republican members of Congress Mark Foley and Larry Craig as well as the thieving GOP superlobbyist Jack Abramoff. As Brit Hume of the conservative Fox News network put it on election night 2006, Democrats had carried the day, but 'from what we could see from all the polling and everything else, it remains a conservative country'.

By this thinking, Republicans are down but hardly out. Once a new messenger begins making the case for conservatism, free from the taint of Bush and Cheney, Americans will welcome the GOP back into their loving arms. But this thinking is delusional. Republicans aren't the victims of a string of misfortunes; they were the beneficiaries of a deeply unsettling period of war and terrorism. Now that fears of terrorism have dimmed and the Iraq war has turned from a political benefit to a political liability, it will likely become evident that the foundations of their party are crumbling.

Look at voting patterns. During the Reagan era of the 1980s, the old Democratic coalition of minorities and union-friendly, working-class Democrats frayed as conservatives used cultural appeals to split off blue-collar 'Reagan Democrats'. But over the past 15 years, two new groups - women and professionals, especially those in America's rising 'knowledge' economy - have flocked to the Democratic camp. Professionals, a broadly defined class that ranges from doctors to actors, sympathise with some of the GOP's instincts, but have increasingly tended to vote on the basis of their social libertarianism on issues such as abortion and stem cell research. Women have been alienated by Republican hostility to social programmes.

While a generation ago, women voted strongly in favour of Republicans, their rising levels of education and participation in the workforce have brought them into the Democratic fold, especially worrisome for the GOP, given that women are more reliable voters than men. This shift has been largely responsible for a gradual change in the electoral map, as these voting blocs are turning once-solid Republican states such as Virginia, Arizona and Colorado into places where Democrats can and do win.

Moreover, Republicans have alienated minorities in droves. First, there was Katrina, whose images of African-Americans left unaided in New Orleans erased the gains made by Republican outreach efforts to black voters. More recently came the wave of demagoguery over illegal immigrants, who have become a scapegoat for America's rising economic insecurity. Rove's realignment plan counted on wooing America's Latino population into the Republican fold. Last spring, Bush tried to grant millions of illegal immigrants a new path to US citizenship (he was unsuccessful), but his fellow Republicans trashed the idea as an 'amnesty'. The effect is evident in a December poll showing that Latinos prefer Democrats to Republicans by a 34-point margin. Rove's dream has been destroyed for the foreseeable future.

As the Democratic coalition expands, the Republican coalition is collapsing. Ronald Reagan's greatest political triumph was his ability to join together three groups with little in common: economic conservatives, religious conservatives, and national-defence conservatives. Bush brilliantly sustained this coalition, but over the past few years those branches have begun to clash. Evangelical voters, who tend to have lower incomes, have grown suspicious of the party's wealthy plutocrats. (The rise of Mike Huckabee, who offers a strong class-appeal suspicion of the rich, is perfect evidence.) The more socially moderate wealthy Reublicans are blenching at the rising pitch of the anti-gay, anti-abortion Christian agenda. And everyone is wary of the defence conservatives who led the way into Iraq.

Polls show that Americans have grown suspicious of free trade, support raising taxes on the rich and back government intervention to increase health care coverage. Thanks to the debacle in Iraq, Democrats have even closed a generation-long Republican advantage on the question of who can best handle national security, once one of the Democrats' most debilitating weaknesses.

None of this guarantees that Barack Obama or Hillary Clinton or John Edwards will win back the White House. Another 9/11-style event may rescue the Republicans. But the Iowa results suggest that voters are in a revolutionary mood, that they feel their political system has drifted out of tune with their true beliefs. After eight painful and confusing years, those beliefs will likely reaffirm themselves next year in the form of a Democratic President.